1. Technical Field
The present invention relates to systems and methods for evaluating and compensating employees based on performance. In particular, systems and methods consistent with the present invention provide tools for establishing performance expectations, obtaining feedback on individual and organizational performance, linking individual contributions to organizational success, recognizing and rewarding performance at different levels, and ensuring accountability at all levels of an organization.
2. Background Information
Performance evaluation programs are frequently used by organizations, such as companies and government agencies, in order to evaluate employee performance and determine compensation for employees. A performance evaluation program may, for example, be used on an annual or semi-annual basis to evaluate an employee's performance and determine an employee's salary for an upcoming year. In a typical performance evaluation program, performance is measured based on establishing a goal for the evaluation time period. When an employee meets the goal, an incentive is awarded to the employee. The incentive may be a pay increase or a bonus, for example. As a result, once an employee has met the goal, he or she has no incentive to achieve a higher performance. In a similar fashion, an employee that is far from reaching the goal has no incentive to work toward a higher performance.
As can be readily observed, however, a performance evaluation program based on a single goal has significant drawbacks for both employees and organizations. In particular, employees are evaluated and compensation is based on whether they meet a goal or do not meet a goal, instead of individual contributions to the organization. Furthermore, the organization does not benefit from increased productivity and efficiency by employees that are far from reaching the goal, because such employees have no incentive to achieve a higher performance. The same applies to employees already achieving a goal. That is, those employees have no incentive to improve beyond the initial goal.
Systems and methods are needed that allow employees to concentrate on achievements within their control or influence and that are based on their “line-of-sight” in the organization. Furthermore, employees should know what is expected of them and how their actions impact the organization. The closer an employee is to a target, the more motivated he or she will be to achieve the target. In addition, employees who are far above or below a target should be provided with an incentive to continue improving because the organization will benefit from their efforts. Accordingly, there is a need for systems and methods of performance evaluation that encourage a higher performance at every level of an organization.